The global private secondary market exceeded US$130 billion in transaction volume in 2025, according to data from Jefferies. This figure represents a massive pool of capital, and a growing portion is now targeting Canadian private technology companies—including a cohort of Vancouver startups that have been minting paper millionaires for nearly a decade.
A secondary transaction involves the sale of existing private company shares—held by an employee, founder, or early investor—to a third-party buyer. The company does not raise new capital, and dilution is avoided. An employee who has waited years for a liquidity event can convert stock options or restricted shares into cash, while the buyer, often a specialist fund, gains exposure to a late-stage private company at a negotiated price.
While theoretically simple, the process is complex in Canada due to regulatory frameworks, tax treatments, and historical norms that have made secondaries rare.
The Paper Wealth Problem
Vancouver’s startup ecosystem matured during a specific window. Companies founded between 2011 and 2014—such as Jane Software and other prominent Metro Vancouver firms—raised venture capital and created equity packages that appeared extraordinarily valuable. The 2021–2022 valuation reset, combined with a closed IPO window and a cooled acquisition market, left many employees holding equity with no clear mechanism to realize its value.
For early employees who accepted below-market salaries in exchange for equity, this illiquidity is a significant financial hurdle. One representative case involves a software engineer who joined a Vancouver SaaS company in 2016. With a strike price of $0.42 and a 2024 409A valuation of approximately $18.00, his 85,000 options represented over $1.5 million in paper value. Through a structured secondary facilitated by a Vancouver-based exempt market dealer, he sold 40 per cent of his vested options, converting roughly $600,000 into cash.
The Platforms Moving Canadian Paper
Two U.S.-based platforms have emerged as key infrastructure for these transactions. Forge Global has reported increased activity from Canadian sellers and buyers. Nasdaq Private Market facilitates company-sponsored tender offers, a model gaining traction with growth-stage firms aiming to provide liquidity without losing cap table control.
In British Columbia, those facilitating these transactions must be registered as an exempt market dealer with the BC Securities Commission. This ensures suitability assessments and compliance, which, while rigorous, is becoming more manageable as deal sizes grow.
The Tax Math
The 2024 federal budget increased the capital gains inclusion rate from one-half to two-thirds for gains exceeding $250,000 annually. This shift, effective June 25, 2024, has altered the after-tax math for employees. Tax advisers recommend obtaining a written tax opinion and modeling multiple scenarios—such as staged sales across tax years—before committing to a structure, as per Canada Revenue Agency guidance.
Retention as a Competitive Weapon
Companies that proactively facilitate employee liquidity are gaining a hiring advantage. Prospective senior engineers now frequently inquire about liquidity pathways. Firms that offer a history of secondaries or formal programmes provide a compelling alternative to those treating their cap table as a closed system.
While the secondary market does not replace the IPO market, it serves as a vital pressure-release valve, allowing employees to capture value without requiring a dramatic corporate exit.
What to Watch
- BCSC exempt market dealer registrations: Watch for new entrants in 2026 specializing in private secondaries.
- Company-sponsored tender offers: If prominent late-stage Vancouver firms launch formal liquidity programmes, others will likely follow to remain competitive.
- CRA administrative guidance: Further clarification on edge cases regarding the 2024 capital gains inclusion rate would assist in pending transactions.
- Cross-border buyer activity: Any increase in participation from U.S.-based secondary funds would significantly accelerate market development.
